British Marine have today announced an important update with regards to the future use of red diesel in private pleasure craft.
It has come to light that HMRC has lost its defence with the European Union Court of Justice of Case 503/17 against the use of marked fuel (red diesel) for the purposes of propelling private pleasure craft.
The court ruled that the UK failed to fulfil its obligations under Council Directive 95/60/EC of 27 November 1995 on fiscal marking of gas oils and kerosene (OJ 1995 L 291, p. 46). It is understood that HMRC is now examining the judgment and will announce how and when the UK will adjust its practices in due course. British Marine is also seeking an urgent meeting with HMRC to discuss the next steps and the potential impact companies within the sector and the leisure marine industry.
This situation also arose in July 2011, when the European Commission indicated its intention to commence infraction proceedings against the UK. In May 2013 the European Commission formally requested that the UK amend its legislation and issued a reasoned opinion to the UK Government, which HMRC indicated its intention to challenge in July 2013. As a result, in July 2014, the European Commission referred the UK to the European Union Court of Justice.
The judgment of the European Court means that, while the UK remains subject to the Fuel Marker Directive, the UK must bring its practices into line with this ruling.
If you have any questions following this update, please get in touch with Simon Anslow, VAT Partner here.